Reckitt Benckiser in £13.2bn takeover talks

Posted on 2 Feb 2017 by Fred Tongue

British consumer goods manufacturer Reckitt Benckiser is in talks to acquire American firm Mead Johnson for £13.2bn.

Reckitt Benckiser Group Plc is in advanced talks with Mead Johnson Nutrition Co to acquire the American baby food company. Reckitt Benckiser said that it has made an offer of $90 in cash for each Mead Johnson share, which is a 29.5 per cent premium on the stock’s closing price.

Reckitt is best known for producing cleaning and over-the-counter health products, while Mead Johnson is famous for baby formula milk. Reckitt has seen share prices rise by almost 5 per cent since news broke of the proposed deal late Wednesday night.

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The deal is believed to be part of Reckitt’s plan to increase the firm’s growth in Asia. Mead Johnson currently owns a 12 per cent market share of the fast-growing baby food market in Asia. This is due in part to Western brands being well trusted in Asia due to recent, high-profile baby milk scandals in China that involved local producers.

Durex, Dettol, Nurofen and Scholl are some of Reckitt’s most recognised brands but the firm is not currently in the baby food market and only operates a small food business.

Mead Johnson is believed to have been the subject of several takeover bids recently, with Danone and Nestle interested in acquiring the company.

Reckitt has said that it would finance the deal through a combination of debt and cash. In a statement the firm said, “the parties are presently engaged in a period of due diligence and contract discussion.

“There is no certainty that any transaction will ultimately be agreed, nor as to the terms on which any transaction might occur.”

If the deal is completed the premium expected to be paid is in line with other similar deals in the recent past.

The British firm is headquartered in Slough and also has sites in Derby, Nottingham and Hull.